Gaiam Reports 2007 Results

- Earnings per share increased 48% to $0.34

- Operating income increased 85% to $10.5 million

BROOMFIELD, Colo., March 10 /PRNewswire-FirstCall/ -- Gaiam, Inc. (Nasdaq: GAIA), a lifestyle media company providing a broad selection of information, media, products and services to customers who value personal development, wellness, ecological lifestyles, responsible media and conscious community, announced today results for its year ended December 31, 2007.

Gaiam also announced that it will host a conference call today, March 10, 2008, at 2:30 p.m. MDT (4:30 p.m. EDT) to review fiscal year 2007 results.

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Revenue for the year ended December 31, 2007 increased 19.8% to $262.9 million from $219.5 million for 2006. The internal growth rate was 17.5%. Revenues for Gaiam's direct to consumer segment increased 20.5% to $151.4 million. Revenues for Gaiam's business segment increased 18.9% to $111.5 million.

Gross profit increased 20.0% to $168.4 million or 64% of revenue during 2007 from $140.3 million or 63.9% of revenue during 2006. The increase over 2006 was primarily due to higher margin international sales and subscriptions.

Operating income for 2007 increased 85.3% to $10.5 million, or 4.0% of revenue, compared to operating income of $5.6 million, or 2.6% of revenue, in 2006. The increase was primarily due to higher revenue and operating leverage, even after significant community investments.

Net income for the year increased 51% to $8.5 million, as compared to net income of $5.6 million, for the year ended December 31, 2006. Earnings per share for the year increased 48% to $0.34, from $0.23 per share for the last fiscal year. Depreciation and amortization for 2007 was $12.3 million.

For the fourth quarter of 2007, Gaiam revenue increased to $81.8 million from $72.8 million for the same period last year. With the portion of revenues received by end of third quarter, internal growth for second half of the year was 19.7%. Earnings per share for the fourth quarter was $0.17, and depreciation and amortization was $3.7 million.

According to Nielsen's VideoScan, Gaiam's U.S. market share in the fitness/wellness DVD category grew to 49.4% in 2007 from 44.7% in 2006.

Lynn Powers, Gaiam's President, commented, "We are pleased that we were able to deliver strong internal growth along with an 85% increase in operating income. For 2007, we successfully leveraged our leading media content growing our DVD market share in fitness/wellness to 49.4%. With our market share now approaching 50%, we intend to sacrifice some of the share to achieve a category management role which will increase our revenue and profitability."

During the year, Gaiam strengthened its community by acquiring Zaadz, a leading social networking site; LIME Media, a multimedia lifestyle company; and a majority ownership of Conscious Enlightenment, an online and offline community. Gaiam also entered into a strategic relationship with Care2, a social networking site with 7.5 million members. Additionally, the Company expanded its solar business with the acquisition of a solar energy integrator.

During 2007, Gaiam generated $13.4 million in cash from its operations, compared to cash used of $(0.5) million during the last year, repurchased 2.5 million shares of its stock and ended the year with $66 million in cash and no debt.

"We are very pleased with our results, which allowed us to accelerate development of our community and new subscription programs and still deliver a 48% increase in earnings per share for the year. We look forward to building on our achievements by continuing to strengthen our position as the leader in the LOHAS community," said Jirka Rysavy, Chairman and Chief Executive Officer.

Subsequent to the year end, Gaiam filed a Form S-1 for the initial public offering of its solar subsidiary Real Goods Solar, Inc., purchased the remaining ownership in Conscious Enlightenment, divested of all business newspapers acquired in the purchase of Conscious Media, and began a reorganization of its U.K. subsidiary. All other international markets were converted from product sales to licensing arrangements. Recently, Gaiam acquired SPRI, marketer of professional fitness products, to expand its professional market reach. Including acquisitions, divestitures and the restructuring of our international markets as licensing, Gaiam expects its revenues for 2008 to be approximately $300 million.

A replay of the call will begin approximately one hour after the end of the call and will continue until 11:59 p.m. EDT on March 17, 2008.

Replay number: 888-566-0486

For more information about Gaiam, please visit http://www.gaiam.com, or call 1-800-869-3603.

This press release includes forward-looking statements relating to matters that are not historical facts. Forward-looking statements may be identified by the use of words such as "expect," "believe," "will," "should" or comparable terminology or by discussions of strategy. While Gaiam believes its assumptions and expectations underlying forward-looking statements are reasonable, there can be no assurance that actual results will not be materially different. Risks and uncertainties that could cause materially different results include, among others, introduction of new products and services, completion and integration of acquisitions, the possibility of negative economic conditions, and other risks and uncertainties included in Gaiam's filings with the Securities and Exchange Commission. Gaiam assumes no duty to update any forward-looking statements.



                                 GAIAM, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (Unaudited)
                    (In thousands, except per share data)

                            Twelve Months Ended      Twelve Months Ended
                             December 31, 2007        December 31, 2006

    Net revenue           $262,943       100.0%     $219,480       100.0%

    Cost of goods sold      94,565        36.0%       79,150        36.1%

    Gross profit           168,378        64.0%      140,330        63.9%

    Operating expenses     157,925        60.0%      134,689        61.4%

    Income from operations  10,453         4.0%        5,641         2.5%

    Other income             4,148         1.5%        3,905         1.8%

    Income before income
     taxes                  14,601         5.5%        9,546         4.3%

    Income tax expense       5,767         2.2%        3,774         1.7%

    Minority interest in net
     income of consolidated
     subsidiaries             (310)       -0.1%         (128)        0.0%

    Net income              $8,524         3.2%       $5,644         2.6%

    Shares outstanding:
      Basic                 24,962                    24,349
      Diluted               25,214                    24,617

    Income per share:
      Basic                  $0.34                     $0.23
      Diluted                $0.34                     $0.23



                                 GAIAM, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (Unaudited)
                    (In thousands, except per share data)

                            Three months ended         Three months ended
                             December 31, 2007          December 31, 2006

    Net revenue            $81,806       100.0%      $72,781       100.0%

    Cost of goods sold      30,679        37.5%       25,133        34.5%

    Gross profit            51,127        62.5%       47,648        65.5%

    Operating expenses      44,568        54.5%       41,351        56.8%

    Income from operations   6,559         8.0%        6,297         8.7%

    Other income               773         0.9%        1,265         1.7%

    Income before income
     taxes                   7,332         8.9%        7,562        10.4%

    Income tax expense       2,899         3.5%        2,989         4.1%

    Minority interest in net
     income of consolidated
     subsidiaries             (233)       -0.3%         (306)       -0.4%

    Net income              $4,200         5.1%       $4,267         5.9%

    Shares outstanding:
      Basic                 24,846                    27,026
      Diluted               25,154                    27,211

    Income per share:
      Basic                  $0.17                     $0.16
      Diluted                $0.17                     $0.16



                                 GAIAM, INC.
                         CONSOLIDATED BALANCE SHEETS
                   (In thousands, except share information)

                                                  December 31,    December 31,
                                                      2007           2006
                                                  (Unaudited)
    Assets
    Current assets:
      Cash and cash equivalents (1)                  $66,258       $104,876
      Accounts receivable, net                        30,157         25,324
      Inventory, net                                  29,839         24,313
      Deferred advertising costs                       3,602          3,965
      Deferred tax assets                              6,005          3,404
      Other current assets                             5,205          4,965
    Total current assets                             141,066        166,847

    Property and equipment, net                        9,509          7,784
    Media library, net                                37,566         37,201
    Goodwill and other intangibles, net               44,410         28,879
    Deferred tax assets, net                           4,057          5,958
    Notes receivable and other assets                  4,104          4,299
    Total assets                                    $240,712       $250,968

    Liabilities and shareholders' equity
    Current liabilities:
      Accounts payable                               $23,620        $21,464
      Accrued liabilities                             10,631          5,236
    Total current liabilities                         34,251         26,700

    Minority interest                                  6,073          5,662

    Commitments and contingencies

    Shareholders' equity:
      Class A common stock, $.0001 par value,
       150,000,000 shares authorized, 19,553,631 and
       21,749,936 shares issued and outstanding at
       December 31, 2007 and 2006, respectively (1)        2              2
      Class B common stock, $.0001 par value,
       50,000,000 shares authorized, 5,400,000 issued
       and outstanding at December 31, 2007 and 2006       1              1
      Additional paid-in capital (1)                 174,046        200,906
      Accumulated other comprehensive income             991            873
      Retained earnings                               25,348         16,824
    Total shareholders' equity                       200,388        218,606
    Total liabilities and shareholders' equity      $240,712       $250,968


    (1)   On February 6, 2007, Gaiam repurchased 2.5 million shares of its
          Class A common stock for $32.9 million in cash including acquisition
          costs. The repurchased stock resulted in a $32.9 million reduction
          to Additional paid-in capital.

SOURCE Gaiam, Inc.